Finance & Administration Committee Action Item III-C May 13, 2010 Next Capital Funding Agreement
Washington Metropolitan Area Transit Authority Board Action/Information Summary Action Information MEAD Number: 100712 Resolution: Yes No TITLE: Distribute the Capital Funding Agreement PURPOSE: Request the Board of Director`s Finance and Administration Committee approval to distribute and negotiate the flexible funding agreement framework contained in the current Capital Funding Agreement draft and two billing alternatives with the jurisdictional funding partners. DESCRIPTION: The Metro Matters Program will conclude on June 30, 2010. Metro staff has been working with its jurisdictional partners to develop the Capital Funding Agreement (CFA). It will continue the expenditure based budgeting adopted by the Metro Matters program, allowing Metro to attain its goal of using every resource wisely. The initial approval is for FY 2011-2016. Each year the Board of Directors will approve a six-year Capital Improvement Program, adding an additional year to the program. Like the MMFA, the CFA requires signatures from the jurisdictional funding partners. The General Manager is requesting permission to distribute and negotiate the CFA and billing alternatives for signature. FUNDING IMPACT: The FY 2011-2016 Capital Program will be $5 billion. RECOMMENDATION: Approval to distribute for negotiation and signature the Capital Funding Agreement with the jurisdictional funding partners.
Distribution of Next Capital Funding Agreement Finance and Administration Committee May 13, 2010
Purpose To request Board endorsement of the flexible funding agreement framework contained in the current Next Capital Funding Agreement draft and authorize staff to distribute the draft agreement to partner jurisdictions
Flexible Six-Year Agreement Flexible Six-Year Agreement commitment to $5 billion capital program with annual review; jurisdictional billing aligned with project expenditures Line of credit (LOC) to support annual program ($250M) Advantages Demonstrates commitment to Metro capital funding needs Allows jurisdictions to pay as expenditures are made Reduces contracting and financing costs All projects under one roof supports oversight and spending efficiency Allows for increases in Metro capital funding Disadvantages If project expenditures exceed estimates, could require short-term borrowing for cash needs Could cause uncertainty regarding jurisdiction appropriations to a specific fiscal year Implementation Issues/ Concerns Cost of purchasing LOC estimated at $5M over FY2011-16 CIP timeframe Would require annual discussions with jurisdictions regarding funding levels New billing arrangement
The Multi-Year Capital Program Term of agreement Metro Matters Six years with debt service and some out-year spending ( tail ) Next Capital Funding Agreement No expiration Option to cancel every six years Debt service continues even if agreement cancellation is requested Capital Improvement Program Covers: IRP, bus, rail, and safety and security Funding amounts established Jurisdictional approval for changes in major elements without excess funds in transferring category (regarding revenue shortfalls and recovery plans) Amounts subject to appropriation Covers nine categories of projects Projects described in detail and matched with funding sources CIP approved annually with a five-year planning addition (no sixyear locked in program)
The Multi-Year Capital Program (cont.) Metro Matters Next Capital Funding Agreement Jurisdictional Contributions Specific allocated contributions for agreement and tail periods Commitment to match all federal grants annually and provide amounts for system performance funds for the upcoming year No static schedule of funds Metro to provide estimate of required matching funds for succeeding fiscal year If federal grants increase by more than 20%, parties will discuss within 30 days Jurisdictions must contribute all system performance funds allocated by subsidy formulas for placement in Annual Work Plan
The Multi-Year Capital Program (cont.) Metro Matters Next Capital Funding Agreement Funding for Annual Work Plan Projects Silent on funding sources All funds must be considered eligible for matching federal grants All unallocated and expended funds will be dropped from the Annual Work Plan and require approval for future use Unexpended funds from completed projects will be rolled into following year New projects in Annual Work Plan will have sources of funding listed Multi-year projects have first call on current funding sources in out years. If funds are not sufficient, then other funding will be used Debt service and state of good repair projects have first claim on all funds for which they are eligible
The Multi-Year Capital Program (cont.) Metro Matters Next Capital Funding Agreement Subsidy Formulas IRP by weighted average of rail capital and bus capital formulas Rail by rail capital Bus by bus capital No process to update amounts due to Metro Weighted average formula for rail, bus and financing expenditures Paratransit has unique formula Dedicated funding resources will use the dedicated funding provision Amounts adjusted on annual basis Weighted average can be changed as needed
The Multi-Year Capital Program (cont.) Metro Matters Next Capital Funding Agreement Annual Work Plan Contents Projects with funds obligated or expended in next fiscal year Budget, including cost estimates Jurisdictional contributions broken out by cash and debt service Summary current year work with costs incurred to date and remaining costs Summary of remaining Metro Matters projects with estimated costs to complete Broken out by CIP element like Metro Matters Includes expected sources of funds for the budgeted work Must include preliminary results of budget reconciliation process for the recently concluded fiscal year
The Multi-Year Capital Program (cont.) Metro Matters Next Capital Funding Agreement Appropriation Commitment Each year, jurisdictions must notify Metro before June 1 whether the required amount has been appropriated or will be appropriated Written assurance that all reasonable efforts will be undertaken to obtain such appropriations Same but more detailed. No CIP or Annual Work Plan will be approved without all jurisdictions certifying that funding levels are reasonable and accurate reflections of available funds Reasonable efforts will require a jurisdiction to request its legislative body to appropriate the entire amount of funds required under the terms of this agreement
The Multi-Year Capital Program (cont.) Annual Budget Reconciliation Process Metro Matters Actual expenditures for projects/activities to date as compared to planned expenditures Actual contributions to date compared to scheduled contributions Projected contributions for remainder of program Actual grant amounts received as compared to projected amount for the same time Estimated cost to complete program Next Capital Funding Agreement Same but with expected sources of funds added to the estimated cost to complete program
The Multi-Year Capital Program (cont.) Metro Matters Next Capital Funding Agreement Reprogramming Board approval obtained To reprogram to a different element requires certification that the work in the first element can be completed with the remaining funds More formalized process Changes within category up to 50% of category amount can be approved by CFO Above 50% category amount or changes between categories requires presentation to the JCC and Board approval Addition or elimination of projects require presentation to the JCC 30 days before Board approval
Timeline for Jurisdictional and Board Actions May 13 (today) May FA Committee Committee review of draft agreement and referral to Board May 27 Board Approval of agreement and distribution to jurisdictions for signature Late May Jurisdictional staff initiate processes for required approvals Week of June 7 Public roundtable by Council of the District of Columbia Committee on Public Works and Transportation June 7 or 21 City of Falls Church City Council Work Session June 8 (tentative) Washington Suburban Transit Commission Meeting June 12 Arlington County Board Meeting June 15 Council of the District of Columbia Meeting Committee of the Whole June 22 Meetings of the Fairfax County Board of Supervisors, Alexandria City Council and City of Fairfax Council June 28 City of Falls Church City Council Meeting June 30 General Manager execution of agreement
Recommendation Board endorsement of the flexible funding agreement framework contained in the current Next Capital Funding Agreement draft and authorization to distribute the draft agreement to partner jurisdictions
SUBJECT: NEGOTIATION OF CAPITAL FUNDING AGREEMENT RESOLUTION OF THE BOARD OF DIRECTORS OF THE WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY WHEREAS, The Metro Matters Funding Agreement Will, with the exception of certain projects and for debt service, terminate on June 30, 2010; and WHEREAS, There is a need to negotiate a follow-on agreement to continue the capital projects program of Metro; and WHEREAS, The contributing jurisdictions and Metro have been discussing various structures for the new Capital Funding Agreement along with proposed terms; and WHEREAS, It is important to receive guidance from the Board on the preferred agreement structure before concluding these negotiations; now, therefore be it RESOL VED" That the Board of Directors authorizes staff to negotiate a Capital Funding Agreement with the contributing jurisdictions along the lines of the "Flexible Six-Year Agreement" option which provides for the contributing jurisdictions to match all federal funds received by Metro for capital projects and to annually review each jurisdiction's ability to provide additional capital funds to Metro for additional capital projects; and be it further RESOL VED" That staff shall bring the agreed-upon Directors for its approval; and be it finally agreement RESOLVED" That this Resolution shall be effective immediately. back to the Board of